Susquehanna Workforce Network, Inc.

Significant Deficiencies Federal Program: U.S. Department of Treasury Pass-Through from Maryland Department of Labor Major Program: Coronavirus State and Local Fiscal Recovery Funds (21.027) Finding 2025 - 002: Transactions Improperly Recorded - Allowable Costs Criteria: 2 CFR Part 200.403(e) requires that costs should be determined in accordance with generally accepted accounting principles for such charges to be allowable under federal awards. Generally accepted accounting principles require expenses to be recognized when incurred. Prepaid annual services should be recognized ratably over the contract period. In addition, 2 CFR Part 200.334 requires recipients to maintain financial records sufficient to show compliance with federal statues, regulations, and terms and conditions of the award. Condition: During our audit we identified certain transactions that were improperly expensed in their entirety in the fiscal year. Context: A review of 40 disbursements totaling $570,943 noted three transactions totaling $4,291 that were improperly expensed entirely in the current year. A portion of these transactions should have been accrued as prepaid expenses. Cause: The three invoices were not properly reviewed for the effective term of the contract. Management therefore did not consider the portion of the contract that extended into the next fiscal year to determine which amounts should have been deferred into the upcoming year. Effect: Costs could be deemed unallowable by the awarding agency if not recorded in the proper period in accordance with generally accepted accounting principles. Questioned Costs: $2,182 of known costs charged to federal awards outside of the proper period. Recommendation: We recommend that management adequately review service contracts paying particular attention to the service period. When the contract extends into the subsequent fiscal year an adjustment should be made to reclassify as a prepaid any portion of the contract that falls outside the current fiscal year end. View of Responsible Officials and Planned Corrective Action: We are in agreement with the finding and will extra care to review service invoices to ensure expenses are allocated between periods properly.

Failure to Submit Audit Reports by Due Date Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and more specifically, Section 200.512, requires the audit must be completed and data collection form and reporting package must be submitted within nine months after the end of the audit period. Condition: Susquehanna Workforce Network, Inc.’s data collection form and reporting package were due by March 31, 2023. Susquehanna Workforce Network, Inc.’s audit was completed January 25, 2023, however the data collection form and reporting package was not completed until July 18, 2023. Cause: New to the data collection form was the requirement to include the Network’s Unique Entity ID (UEI) number. The Network experienced difficulties in obtaining this ID number and therefore could not complete the submission until the information was obtained from the System for Award Management (SAM). Questioned Costs: None. Effect: The Network may not qualify as a low-risk auditee for two years. Recommendation: We understand the submission was completed promptly after the information was obtained and would like to take this opportunity to remind management the importance of making timely submissions moving forward. View of Responsible Officials: We are in agreement with the finding and will ensure future submissions are completed timely.